CESC hints at hiking tariffs after increase in coal prices

After the recent hike in coal prices, RPG Group’s flagship company CESC Ltd has hinted at an increase in power tariff for its customers soon.

It has already approached the sector regulator asking permission for a rise in prices to about 40 to 50 paise per unit.

“The arbitrary rise in prices by Coal India Ltd (CIL) is a cause of concern for us. I believe that there should be some discussions from the part of CIL before increasing prices. Since the impact of this price rise is about Rs 250 crore on the company, we have apllied to the regulator for an increase in tariff rates. The hike would be somewhere between 40-50 paisa per unit,” said Sanjiv Goenka, Vice Chairman, CESC.

CIL had raised coal prices on 27 February.

To reduce the dependency on the state-run coal mining company, CESC is looking for coal equity and linkages both in domestic and overseas market. The company also is planning to participate aggressively on the bidding for coal blocks to be initiated by the government soon.

“We will also bid aggressively when auction of coal blocks by the Centre comes through in the next one year. The company will also seek the help of new West Bengal government in procurement more mines,” he said.

However, regarding the import of coal from South African coal mine, he said, “Export from the South Africa mine will start from 2014. We have an agreement to import 40 million tonne of coal for 20 years.”

The group had aquired 10 per cent stake in Resource Generation Limited (RG), an Australian coal mining company, last year and had inked an offshore coal procurement contract with them for 20 years.

The coal was supposed to feed CESC’s greenfield projects at Haldia in West Bengal and Chandrapur in Maharashtra.

“The coal from South Africa may be linked to any of our three projects. Or it may be for a fourth project in some other part of the country also, we are yet to decide on it,” he added.